European equities declined on Wednesday as disappointing earnings from the luxury sector fueled concerns about the profit outlook for the semiconductor industry. The British pound fell as a decrease in UK inflation heightened expectations for interest rate cuts.
The Stoxx 600 index dropped 0.4%, with chipmaking giant ASML Holding NV continuing its downward trajectory following a profit warning issued on Tuesday. Luxury stocks were notably affected, with LVMH and Salvatore Ferragamo both experiencing declines of up to 7% after releasing underwhelming earnings updates. Meanwhile, US equity futures showed little movement.
ASML’s decline sent shockwaves throughout the industry, contributing to a loss of over $420 billion in market value for an index of US-traded chipmakers and major Asian stocks. Nvidia Corp. saw its shares tumble nearly 5% on Tuesday after reaching a record closing price earlier in the week.
Despite the setbacks faced by companies like Nvidia and ASML, Peter Fitzgerald, chief investment officer for macro and multi-asset at Aviva Investors, emphasized the resilience of market demand, particularly in the artificial intelligence sector, alongside supportive central bank policies.
“Our view is that there is enough underlying strength in markets,” Fitzgerald stated. “Particularly with central banks on an easing path providing broad support.”
The pound weakened 0.6% to $1.2990, marking its lowest level since August 20. New figures released Wednesday indicated that consumer prices rose only 1.7% in September compared to the previous year, falling short of economists’ forecasts. This data reinforced investor expectations for more aggressive easing measures from the Bank of England.
Bloomberg’s dollar index rose slightly after climbing to its highest level in about two months. This uptick followed former President Donald Trump’s defense of proposals to increase tariffs on foreign imports. Atlanta Fed President Raphael Bostic commented that he anticipates a slowdown in the US economy this year while maintaining overall robustness, noting potential fluctuations in the downward trajectory of inflation. Treasury yields also dipped.
In Asia, a Bloomberg index tracking China’s property shares surged by as much as 8.3% as markets prepared for a joint news conference featuring government officials, including the housing minister and central bank representatives, scheduled for Thursday.
Chinese stocks have been volatile since late September, when a series of central bank stimulus measures sparked a wave of optimism that is now beginning to fade. Investors are keenly observing whether authorities will implement more substantial measures to strengthen the economy.
Related topics: